A partnership firm is formed when two or more people join up to start a business and distribute profits according to predetermined equations. Any type of trade, activity, or profession is included in the partnership business. In comparison to corporations, forming a partnership is simple and requires fewer regulations.

A partnership deed is an agreement between partners that governs the relationship between them as well as between the partners and the partnership firm as referred by the Indian Partnership Act, 1932.

Advantages Of A Partnership Firm

Easy Incorporation

In comparison to other types of business entities, forming a partnership firm is simple. By partnership agreement, the partnership firm can be formed. There are no other documents necessary outside the partnership deed. It isn't even necessary to register it with the Registrar of Firms. Because registration is elective and not necessary, a partnership firm can be created and registered at a later period.

Fewer Compliances

In comparison to a company or a Limited Liability Partnership(LLP), a partnership firm is subject to fewer regulations. A Digital Signature Certificate (DSC) and Director Identification Number, which are necessary for company directors and designated partners of an LLP, are not required for the partners. Any modifications in the business may be readily implemented by the partners. Their operations are subject to legal constraints. It is cost-effective, and the registration process is less expensive than forming a corporation or limited liability partnership. The dissolution of a partnership firm is simple and requires few legal procedures.

Ratio Of Profit

The profits and losses of the company are shared in an equal ratio by the partners. They have complete control over the profit and loss ratio in the partnership company. They feel a sense of accountability and ownership because the firm's profitability and turnover are based on their efforts. Any losses incurred by the business will be equally shared or according to the partnership agreement ratio, lessening the weight of loss on one individual or partner. They are severally and severally accountable for the firm's operations.

Fast Decision

Because there is no distinction between ownership and management, the judgement-making process in a partnership business is swift. All choices are made jointly by the partners and can be executed right away. The partners have extensive rights and responsibilities that they can exercise on behalf of the company. They can even act on behalf of the partnership firm without the approval of the other partners in certain situations.

But along with the advantages, there are certain disadvantages of a partnership firm also.

Disadvantages Of Partnership Firm

No Perpetual Successions

Unlike a corporation or a Limited liability partnership, a partnership firm does not really have a permanent succession. This implies that a partnership firm will dissolve if one of the partners dies or if all but one of the partners becomes bankrupt. It can also be abolished if one of the partners provides the other partner's notice of the firm's dissolution. As a result, the partnership firm might dissolve at any time.

Unlimited Liability

The major drawback of a partnership firm is that the partners' liability is unlimited. Any loss of the firm must be paid out of the partners' personal assets. In a business or Limited liability partnership, however, the responsibility of the shareholders or partners is limited to the value of their shares. All partners in a partnership firm are liable for the liabilities generated by one partner. If the firm's assets are inadequate to repay the debt, the partners will be forced to repay the creditors from their personal assets.

Difficulty In Raising Funds

It is hard to raise funds since the partnership firm lacks eternal inheritance and a separate legal body. In comparison to a corporation or a Limited liability partnership, the firm has fewer possibilities for generating capital and expanding its operation. People have less confidence in the company since there are no strong legal regulations. The firm's financial statements do not have to be publicly disclosed. As a result, borrowing money from outsiders is tough.

Resources Are Limited

A partnership firm can have a maximum of twenty participants. The number of partners is limited, and as a result, the cash invested in the business is also limited. The entire amount of money invested by each partner makes up the firm's capital. As a result, the partnership firm's resources are limited, and it would be unable to engage in large-scale operations.

Online Partnership Firm Registration Process

Application For Registration

A completed application form must be sent to the Registrar of firms in the state where the firm is operating, together with the required payments which generally vary from place to place. All of the partners or their agents of the firm must sign and verify the registration application.

The application, which comprises the following details, can be sent or delivered to the Registrar of Companies.

• The firm's name.
• The firm's primary location of operations.
• The location of any other locations where the firm conducts business.
• Each partner's date of joining.
• All of the partners' names and permanent addresses.

Selection Of Name Of The Partnership Firm

A partnership firm can be given any name. However, some requirements must be fulfilled while choosing a name:

• The name should not be too identical to or similar to that of another firm in the same industry.
• The name should not include terms like a crown, emperor, empress, kingdom, or any other words that imply official authorization or support.

Registration Certificate

The Registrar will register the firm in the Register of firms of the state where the firm is located or situated and issue the Registration Certificate if the Authority is satisfied with the application for registration and paperwork. The Register of Firms includes up-to-date details on all businesses, and anybody can use it for a charge.

The Registrar of Companies in the state where the business is located will receive an application form and payment. All representatives or partners must sign the application.

Documents Required For Partnership Firm Registration

• Application for partnership registration (Form 1)
• Original Partnership Deed certified copy
• Affidavit sample confirming that all information in the partnership deed & documentation is correct.
• PAN The partners' identification cards and addresses are required.
• Proof of the firm's primary location  

If the papers satisfy the registrar, the firm will be entered into the Register of Firms and a Registration Certificate will be issued.

Conclusion

There are certain necessary steps that must be followed to register a partnership firm in Madhya Pradesh. The process of partnership firm registration is a little different from company registration. But with Online legal India and their team of experts, the process will be an easy one.

The CAs/CS have years of experience and are the best in their field. They help you to complete the process of  partnership firm registration  within a short period of time and in a few simple steps. 

The charges that are being charged by them are very nominal and affordable. Don’t wait anymore. Register yourself to Online legal India to experience the best partnership firm registration process.